Financial Data and Key Metrics Changes - Earnings for Q3 2025 were $3.36 per diluted share, down from $4.10 in the prior year quarter [9] - Consolidated pre-tax income was $1.4 billion on revenues of $9.2 billion, with a pre-tax profit margin of 14.7% [6] - Net income for the quarter was $1 billion, with home sales revenues of $8.6 billion on 23,160 homes closed, compared to $9.2 billion on 24,155 homes closed in the prior year quarter [9][10] - Average closing price for the quarter was $369,600, down 1% sequentially and down 3% year over year [9] Business Line Data and Key Metrics Changes - Net sales orders were flat year-over-year at 23,071 homes, with order value decreasing 3% to $8.4 billion [10] - Home sales gross margin was 21.8%, stable sequentially but expected to decrease in Q4 due to increased incentive costs [11] - Homebuilding SG&A expenses increased 2% from last year, with SG&A as a percentage of revenues at 7.8%, up 70 basis points from the prior year [12] Market Data and Key Metrics Changes - The average number of active selling communities increased 4% sequentially and 12% year over year [10] - The cancellation rate for the quarter was 17%, up from 16% sequentially but down from 18% in the prior year quarter [10] - The company ended the quarter with 38,400 homes in inventory, of which 25,000 were unsold [13] Company Strategy and Development Direction - The company remains focused on maximizing capital efficiency to generate substantial operating cash flows and deliver returns to shareholders [7] - The strategic relationship with Forestar, a majority-owned residential lot development company, is vital for providing finished lots to the homebuilding industry [18] - The company plans to repurchase $4.2 billion to $4.4 billion of common stock in fiscal 2025, subject to cash flow and share price changes [23] Management's Comments on Operating Environment and Future Outlook - Management noted that new home demand is impacted by affordability constraints and cautious consumer sentiment, with expectations for elevated sales incentives in Q4 [8] - The company has a positive outlook for the housing market over the medium to long term, despite current economic volatility [23] - Management emphasized the importance of adjusting to market conditions in a disciplined manner to enhance long-term value [23] Other Important Information - The company generated $2.9 billion of cash from operations over the past twelve months and returned $4.6 billion to shareholders through repurchases and dividends [7] - The company has a strong balance sheet with low leverage and healthy liquidity, providing financial flexibility to adapt to market changes [20] - The average FICO score of borrowers was 720, with first-time homebuyers representing 64% of closings handled by the mortgage company [19] Q&A Session Summary Question: Trends in incentives and competitive pressures - Management indicated that incentives have been choppy throughout the quarter, responding to market conditions and competition [27] Question: Consumer strength and impact of student loan repayments - Management noted an increase in FHA product selection among buyers but did not see significant impacts from student loan repayments [31] Question: Fourth quarter gross margin outlook - Management expects a decline in gross margin due to higher incentives, despite a strong performance in Q3 [35] Question: SG&A expenses and long-term targets - Management stated that SG&A improvements are expected to be gradual, with a long-term target of 7% to 8% [42] Question: Community count and 2026 expectations - Management anticipates moderation in community count as they enter 2026, with a focus on managing inventory based on market absorption [54] Question: Resale inventory competition - Management does not see significant competition from resale inventory, as new homes remain attractive to buyers [81] Question: Performance in larger vs smaller markets - Management noted better performance in smaller markets with less public builder competition compared to larger markets [84] Question: Lot cost inflation and future expectations - Management expects mid-single-digit inflation in lot costs in the near term, with potential relief from inflation in the future [86]

Financial Performance & Shareholder Returns - D R Horton's return on equity was 16 1% for the trailing twelve months ended June 30, 2025[5,82] - The company returned $4 6 billion to shareholders through repurchases and dividends[5] - D R Horton expects to repurchase $4 2 billion to $4 4 billion of common stock in fiscal year 2025[36,46] - D R Horton expects to payout approximately $500 million in dividends in fiscal year 2025[36,46] Market Position & Operations - D R Horton is the largest homebuilder in America for 23 years[5] - D R Horton operates in 126 markets across 36 states[4] - 89% of D R Horton's revenue comes from homebuilding[7] - 71% of homes closed were priced below $400k[23] - D R Horton's average sales price was 28% below the national average for the quarter ended 6/30/25[30] Q3 2025 Results & FY 2025 Expectations - D R Horton's Q3 2025 earnings per diluted share were $3 36 on net income of $1 0 billion[82] - D R Horton's Q3 2025 home sales revenues were $8 6 billion on 23,160 homes closed[82,83] - D R Horton expects consolidated revenues in the range of $33 7 billion to $34 2 billion for FY 2025[36]

Group 1: Earnings Performance - D.R. Horton reported quarterly earnings of $3.36 per share, exceeding the Zacks Consensus Estimate of $2.9 per share, but down from $4.1 per share a year ago, representing an earnings surprise of +15.86% [1] - The company posted revenues of $9.23 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 5.13%, compared to $9.97 billion in the same quarter last year [2] Group 2: Stock Performance and Outlook - D.R. Horton shares have declined approximately 6.2% since the beginning of the year, while the S&P 500 has gained 7.2% [3] - The current consensus EPS estimate for the upcoming quarter is $3.32 on revenues of $9.89 billion, and for the current fiscal year, it is $11.37 on revenues of $33.98 billion [7] Group 3: Industry Context - The Building Products - Home Builders industry is currently ranked in the bottom 16% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor decisions [5]

Core Viewpoint - D.R. Horton Inc. is expected to report disappointing results for Q3 fiscal 2025, with significant declines in earnings and revenues due to ongoing affordability pressures and consumer uncertainty [3][6][9]. Financial Performance - In the last reported quarter (Q2 fiscal 2025), D.R. Horton reported earnings of $2.58 per share, down from $3.52 a year ago, and net income of $810 million on revenues of $7.7 billion [3][6]. - Home sales revenues decreased by 15% to $7.18 billion, with the average selling price of homes down 1% year-over-year to $372,500 [3][9]. - The consensus estimate for Q3 earnings per share is $2.93, indicating a 28.5% decline from the previous year's EPS of $4.10, while revenues are expected to be between $8.4 billion and $8.9 billion, down from $9.97 billion a year ago [6][9][11]. Market Conditions - The U.S. homebuilding market is experiencing soft demand, elevated inventories, and margin pressures, which are expected to negatively impact D.R. Horton's Q3 results [10][12]. - The company anticipates home closings to be between 22,000 and 22,500 units, down from 24,155 units a year ago, due to affordability issues [9][12]. Segment Performance - Homebuilding revenues are projected to decline by 6.7% year-over-year to $6.56 billion, with home closures expected to decrease by 7.6% [13]. - The Rental Property segment is expected to see revenues of $343.6 million, reflecting a 16.9% drop from the previous year [14]. - The Financial Services segment is projected to generate $221 million in revenues, an 8.8% decline from the year-ago level [14]. Margin Analysis - The home sales gross margin is expected to be between 21% and 21.5%, down from 24% reported in the previous year, reflecting a contraction of 280 basis points [15]. - Selling, general and administrative expenses as a percentage of revenues are expected to rise to 7.9% compared to 7.1% a year ago [16]. Orders and Backlog - Net sales orders are predicted to decline by 3.9% year-over-year to 23,887 units, with the backlog expected to decrease by 6.3% to 15,737 units [16]. Stock Performance and Valuation - D.R. Horton stock has gained 9% over the past three months, outperforming the Zacks Building Products - Home Builders industry but lagging behind the broader Construction sector and the S&P 500 [20]. - The stock is trading at a forward 12-month P/E ratio of 11.01, higher than the industry average of 10.25 and above its five-year median of 9.44 [22]. Long-term Outlook - Despite near-term challenges, D.R. Horton maintains a strong market position and resilient operating model, with expectations for a rebound once macro pressures ease [26][27].

Core Viewpoint - Analysts forecast a significant decline in D.R. Horton's quarterly earnings and revenues, indicating potential challenges for the company in the upcoming earnings release [1]. Earnings Estimates - D.R. Horton is expected to report earnings of $2.93 per share, reflecting a year-over-year decline of 28.5% [1]. - Revenue is anticipated to be $8.81 billion, down 11.6% compared to the same quarter last year [1]. - The consensus EPS estimate has been revised upward by 0.4% in the past 30 days, indicating a reassessment by analysts [2]. Revenue Breakdown - Analysts estimate 'Revenues- Home sales- Homebuilding' at $8.21 billion, a decrease of 11.1% year-over-year [5]. - 'Revenues- Rental' is projected to reach $293.28 million, down 29.1% from the previous year [5]. - 'Revenues- Financial Services' is expected to be $222.94 million, indicating an 8% decline [5]. - 'Revenues- Homebuilding' is projected at $8.23 billion, reflecting a 10.9% decrease year-over-year [6]. Geographic Revenue Estimates - 'Geographic Revenues- Homebuilding- Northwest' is expected to be $713.78 million, down 1.6% from the prior year [6]. - 'Geographic Revenues- Homebuilding- North' is projected to reach $1.12 billion, showing a 5.3% increase [6]. - 'Geographic Revenues- Homebuilding- Southwest' is estimated at $1.10 billion, down 16.4% year-over-year [7]. - 'Geographic Revenues- Homebuilding- South Central' is expected to be $1.79 billion, indicating a 10.9% decline [7]. Sales Metrics - The average selling price for homes closed is estimated at $370.81 million, down from $382.20 million in the same quarter last year [8]. - Analysts predict 'Homes Closed' to reach 22,142, compared to 24,155 in the same quarter last year [8]. - 'Net sales order - Homes sold' is estimated at 22,121, down from 23,001 in the previous year [9]. - 'Sales order backlog - Homes in backlog' is projected to be 14,217, compared to 16,792 in the same quarter last year [9]. Market Performance - Over the past month, D.R. Horton shares have increased by 8.4%, outperforming the Zacks S&P 500 composite's 4.2% change [10]. - The company holds a Zacks Rank of 3 (Hold), suggesting it may perform in line with the overall market in the near term [10].

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for D.R. Horton due to lower revenues, with a focus on how actual results will compare to estimates impacting stock price [1][2]. Earnings Expectations - D.R. Horton is expected to report quarterly earnings of $2.93 per share, reflecting a year-over-year decrease of 28.5% [3]. - Revenue projections stand at $8.82 billion, down 11.5% from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised 0.36% higher in the last 30 days, indicating a slight positive reassessment by analysts [4]. - The Most Accurate Estimate for D.R. Horton is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -0.55%, suggesting a bearish outlook from analysts [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive reading is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank of 1, 2, or 3 [10]. - D.R. Horton currently holds a Zacks Rank of 2, but the negative Earnings ESP complicates predictions for an earnings beat [12]. Historical Performance - In the last reported quarter, D.R. Horton was expected to post earnings of $2.66 per share but delivered $2.58, resulting in a surprise of -3.01% [13]. - Over the past four quarters, the company has beaten consensus EPS estimates two times [14]. Conclusion - D.R. Horton does not appear to be a compelling candidate for an earnings beat, and investors should consider other factors when making decisions regarding the stock ahead of the earnings release [17].

Company Overview - D.R. Horton (NYSE: DHI) has experienced a 12% increase in stock price over the past month, outperforming the S&P 500's 4% rise, despite missing earnings expectations recently [2] - The company's stock is currently trading around $140, significantly below its 52-week peak of $197, indicating a potentially attractive valuation compared to the broader market [4] Industry Trends - Confidence in the housing market is improving as mortgage rates have decreased from nearly 7% to approximately 6%, enhancing affordability and encouraging buyer activity [3] - The National Association of Realtors projects that if mortgage rates remain near 6%, around 6.2 million households may afford a median-priced home, potentially stimulating sales for homebuilders [3] Financial Performance - D.R. Horton has shown average revenue growth of 5.3% annually over the past three years, slightly below the S&P 500's 5.5% [5] - In the last year, the company's revenue fell by 4.7% to $35 billion, and in the most recent quarter, sales decreased by 15.1% year-over-year to $7.7 billion [5] - The company maintains an operating margin of 15.1% and a net income margin of 12.2%, but its operating cash flow margin of 8.1% lags behind the S&P 500's average of 14.9% [5] Financial Stability - D.R. Horton has $6.6 billion in debt and a debt-to-equity ratio of 16.1%, which is slightly better than the S&P 500's 19.4% [5] - The company possesses $2.5 billion in cash, representing about 6.9% of its total assets, providing some financial flexibility [5] Conclusion - While D.R. Horton's valuation may appear inexpensive, it is arguably justified due to weak recent growth and average profitability [6] - The stock has potential upside if housing indicators continue to improve, but mixed fundamentals suggest a cautious approach at current prices [6]

Company Performance - D.R. Horton (DHI) closed at $131.90, reflecting a -2.74% change from the previous day, underperforming the S&P 500's gain of 0.83% [1] - Over the past month, D.R. Horton shares increased by 9.78%, outperforming the Construction sector's gain of 7.94% and the S&P 500's gain of 4.99% [1] Upcoming Financial Results - D.R. Horton is set to announce its earnings on July 22, 2025, with an expected EPS of $2.93, indicating a 28.54% decline from the same quarter last year [2] - The consensus estimate for revenue is $8.82 billion, down 11.48% from the prior-year quarter [2] Full Year Projections - For the full year, earnings are projected at $11.47 per share and revenue at $34.1 billion, reflecting declines of -20.01% and -7.34% respectively from the previous year [3] - Recent changes in analyst estimates are crucial as they indicate near-term business trends, with positive revisions suggesting analyst optimism [3] Valuation Metrics - D.R. Horton is currently trading at a Forward P/E ratio of 11.83, which is higher than the industry average Forward P/E of 10.68 [6] - The company has a PEG ratio of 4.24, compared to the industry average PEG ratio of 2.27 [7] Industry Context - The Building Products - Home Builders industry, part of the Construction sector, holds a Zacks Industry Rank of 210, placing it in the bottom 15% of over 250 industries [8] - The Zacks Industry Rank measures the strength of industry groups based on the average Zacks Rank of individual stocks, with top-rated industries outperforming the bottom half by a factor of 2 to 1 [8]

Market Analysis & Investment Strategy - The home construction ETF (ITB) is experiencing its best day since May 12th [1] - Housing recovery is estimated to be at least two years away, according to Piper Sandler [1] - Interest rates are showing signs of potential decline, with yields at 6-week lows [2] - The 30-year fixed mortgage rate remains high at 68%, but is expected to decrease [2] - Market anticipates potential rate cuts in the fall [3] Company Performance & Valuation - D R Horton's stock is considered cheap at 11 times forward estimates [1] - Company guidance regarding margins and deliveries has been adjusted to reasonable levels [2] - D R Horton's execution is considered very good, among the best in the industry [4] - Toll Brothers is also recognized for excellent execution [4]

Group 1 - The company aims to invest in firms with strong qualitative attributes, purchasing them at attractive prices based on fundamentals, and holding them indefinitely [1] - The investment strategy focuses on maintaining a concentrated portfolio to avoid underperformers while maximizing exposure to high-potential winners [1] - The company plans to publish articles on selected companies approximately three times a week, including extensive quarterly follow-ups and constant updates [1] Group 2 - The company may rate high-quality firms as 'Hold' if their growth opportunities do not meet the required threshold or if the downside risk is deemed too high [1]